Interim Orders And Injunctions In Cyprus

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What is an Interim Order or Interlocutory Injunction?

An Interim Order or Injunction is a decree made by a Court following an application from a party to a procedure that either compels someone to take an action or prevents someone from taking an action. An Interim Injunction is simply a Court Order that orders a party to do something or orders a party to refrain from doing something. One of the main reasons that Courts grant interim injunctions is to protect assets pending the determination of the main legal proceedings either in the form of Arbitration of Court action. Thus interim orders can be and are considered to be temporary measures effective, pending the settlement of a Court action or Arbitration award.

What are the main types of Injunctions?

There is no standard and fixed list of Interim Orders and Injunctions issued by the Courts in Cyprus. Interim Injunctions should be distinguished from perpetual (permanent) injunctions, which are final orders, usually made at trial and which continue with no limitation of time. Further distinctions are: a) Inunctions made without notice (ex-parte). These are forms of interim injunctions made in circumstances of urgency. b) Mandatory Injunctions require the other side to do specified acts, whereas prohibitory injunctions require the other side to refrain from doing specified acts. c) Interim Injunctions on a quia timet basis where the other side have not yet committed a civil wrong but have threatened to do so in the future.

To what extent is the power of the Court in Cyprus to issue an Interim Order?

Section 32 of the Court Justice Law - 14/60 confers power on the Cyprus’s Courts to grant an injunction “in all cases in which it appears to the Court just or convenient so to do”. Generally the court has the power to grant interim orders regarding issues non – exhaustively including the following: a) Interim Injunctions b) Interim Declarations c) Freezing Injunctions which may also includes ancillary disclosure orders d) Search Orders e) Disclosure or inspection orders f) Interim Payments Orders

What is the protection that an Interim Order offers to the one seeking it?

A lawsuit can take long time to make it through all the stages of litigation. Pending the determination of the main legal proceedings an irreparable harm may be done to one of the parties to litigation or Arbitration proceedings. Provided that the issue in the main proceedings requires an immediate response the Court, to the application of a party, will grant an Interim Order for example against the risk of alienation of assets or to order someone to cease or continue a specific behavior. Another example can be an injunction against a defendant to stop using a trademark that infringes on the plaintiff’s owned trademark.

What are the conditions that need to be satisfied in order an injunction to be granted?

Interim Orders are decided judiciously, and depend on the facts of each specific situation, case or instance. In a leading Supreme Court decision in Cyprus it was stated that: “the justice and convenience of the case is not the sole consideration to which the Court should pay heed in the case of an interlocutor injunction, and no such injunction should be granted, unless the following conditions are satisfied:- a) A serious question arises to be tried at the hearing; b) There appears to be “a probability” that the plaintiff is entitled to relief and, lastly, c) Unless it shall be difficult or impossible to do complete justice at a later stage without granting an interlocutory injunction.”

Do I have to give notice to the respondent in order to apply to the Court for Interim measures?

Normally Interim Orders and freezing Injunctions cannot happen unless all parties to be bind from the order have properly notified and served with Court documents and applications so that parties involved have an opportunity to have their respective views heard. Notification is normally served by summons that the party should appear in Court to defend allegations being made against him. Is it possible though to apply to the Court for Interim measures without notice to the respondent by an ex-parte application. Ex - Parte communication is when only one side to the proceedings has a chance to have the facts of his case heard by the Court and thus is only allowed only if there is an element of extreme urgency. On an Ex-Parte application the applicant must fully and in detail disclose all material facts to the Court and must satisfy the Court that on the balance of convenience, it is in the interest of the justice to do so.

What are the factors to be taken into consideration from the Courts in Cyprus in exercising the jurisdiction to grant interim injunctions?

Most Injunctions are determined on the balance of convenience. In American Cynamid Co. V. Ethicon Ltd (1975) AC 396 Lord Diplock said at p. 408: ....it would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. There will vary from case to case. ....the extent to which the disadvantages to each party would be incapable of being compensated in damages is always a significant factor in assessing where the balance of convenience lies. ....Where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo..... There may be many special factors to be taken into consideration (in the balance of convenience) in the particular circumstances of individual cases.... Important factors in exercising the jurisdiction to grant interim injunctions are: a) The extent to which damages are likely to be an adequate remedy to either side, and the ability of the other party to pay; b) The balance of convenience; c) Maintain the status quo; d) Any clear view of the court may reach about the relative strength of the parties cases.

Do the Courts in Cyprus have power to grant World-Wide Interim Orders?

In exceptional cases the Cyprus’s Courts may make injunctive orders having worldwide effect. Such orders are made in a very small number of freezing injunctions cases provided that one of the following conditions is met: Either the Respondents, to whom the interim orders are addressed, are subject to the domiciled jurisdiction of the Cyprus’s Courts or the assets to freeze are within the jurisdiction of Cyprus’s Courts. Such an order will not be made where there are sufficient assets within the jurisdiction to satisfy any judgment.

How can the risk of alienation or disposal of assets can be assessed?

Factors relevant to risk can include: a) Evidence that the defendant has already taken steps to remove or dissipate assets. b) Whether there are past incidents of debt default by the defendant. c) Whether the eveidence supporting the substantive cause of action discloses dishonest/or a suspicion of dishonesty on the part of the defendant.

What kind of assets can constitute the subject matter of an interim Court order?

Section 32 of the Courts of Justice Law gives Courts in Cyprus wide interpretation powers as to the nature and extend of the assets can constitute the subject matter of an Interim Court Order. According to an English case-law the word assets can be interpreted in a way to reach assets beyond the defendant’s assets. Courts have established case-law providing useful guidance for interpreting the meaning of “assets” widely and extensively. Assets can include shares, securities, trade goods, office equipment, choses in action as well as money. Third Parties assets will not generally be included in a freezing injunction / order unless the claimant establishes a good arguable case that assets are beneficially owned by the defendant. This can potentially include the assets are owned by a third party who is a limited company as in TSB v Chabra (1989) 1 All ER 1002.

What are the undertakings the claimant must give in the order?

a) The usual undertakings as to damages. This should be supported by a bank or personal guarantee for a fixed amount, which the claimant undertakes to obtain within a certain period of time.

b) To notify the defendant forthwith of the application (if it has been made ex-parte (without notice)) and to serve a copy of the affidavit and order.

c) To inform third parties such as banks.

What is the effect of the order?

The injunction will bind the defendant as well as third parties with knowledge of it. A third party with knowledge who assists the defendant in the disposal or dissipation of frozen assets will be in contempt of court. A Without notice order will remain in force until judgment or further order or, as in most cases, until a return date fixed by the judge at the initial hearing. Discharge can be sought by the defendant on a number of grounds such as where the case was not an appropriate for an order, where a security is provided such a sum sufficient to meet the potential claim paid into the court, discharge due to material non-disclosure, discharge on the basis of delay.

What are the options given to the Defendant when faced with a freezing injunction?

Seek variation or discharge of the order.

Provide Security

Raise procedural defects with the court

Resist excessive requirements in appropriate cases

Apply to Court for the claimant fortify its undertaking in damages by a payment in or security.

Is there any limitation or time frame in applying for an Interim Order or Injunction?

Even though out of the scope and purpose of the establishment of the Interim Orders, in many instances the outcome of the interim relief is determinative of the outcome of the litigation as a whole and this is particularly true in the context of interim injunctions. The obligation to apply for an interim order remedy stems the overriding objective, which includes ensuring that cases are dealt with expeditiously.

Is there any Telephone Hearings scheme in Place followed by the Cypriot Courts?

Even though efforts are made and the overriding objective includes dealing with cases without the parties needing to attend Court and by making use of technology, nevertheless at the moment there is no active case management procedure giving the parties the use of telephone conference calls dealing with applications for Interim Orders or freezing Injunctions. These new to the law and practice, technologically advanced and sophisticated ways of dealing with an application might bring discussions over the confirmation of identifications of parties involved, notices to attend and consents to such a procedure but still this cannot constitute a reason for not bringing in the Cyprus’s legal system the use of technology.

What are the tactical advantages of an Interim Order or Freezing Injunction?

a) It actually blocks and preserves assets upon which a final Court award can be executed in order to satisfy the claim. b) Trace up assets of when orders the defendant/respondent to disclose details of his assets and assets under his control. c) Legalistically out of the scope of the issuing Court but practically causes inconvenience to the respondent affecting his creditworthiness. It can even bring up pressure to bear on the respondent to make him settle.

Conclusion

Injunctions are only remedies, so can usually only be granted if the applicant has a substantive cause of action. The right to obtain an interim injunction is not a cause of action and cannot stand on its own. It is depended upon there being pre-existing cause of action against a defendant arising out of an invasion, actual or threatened by him, of a legal equitable right of the claimant for the enforcement of which the defendant is amenable to the injunction of the Court.